Yesterday in our post Myths Surrounding The US Dollar we discussed how contrary to the medias perception the US Dollar is not tanking. Today we will look at another common misconception regarding the US Dollar. That is that if the monetary base goes up the US Dollar goes down. While this has definitely worked several times in the past it has also not worked several times in the past. Right now the idea of researching before you speak is even more important than normal because the numbers are far larger than normal. if you thought that an increase in the money supply drove the USD lower then you would think that an almost tripling of the monetary base inside of three years would force the USD to drop like rock. In fact most people with whose experience with trading and economics is via their television set would say that the US Dollar would be worth less than their toilet paper.
If you are one of these people who only listen to pundits, politicians, and other putzes and you believe this then please stop reading, scroll down to the bottom of the page, find my e-mail, and let me know how many squares of toilet paper you need. I am running a special of two triple ply Charmin squares for each dollar you send me. Seriously I will trade toilet paper for US Dollars all day long. Why you may ask? Well if you look at the evidence you will see that while the monetary base has exploded to almost triple the size of three years ago and yet the US Dollar is essentially in the same place that is was three years ago. Look at the chart below and you will see that while some rises in the monetary base led to a fall in the USD others led to a rise in the USD. Over the past three years it has obviously let to nothing at all in the USD as the price is virtually unchanged. With the runaway inflation, runaway deficit, and collossal rise in the monetary base the USD by conventional wisdom should be trading at 0, instead it is holding up quite well. (Click on chart to enlarge)
Please don't listen blindly to so called experts on TV. Everyone is always talking their book and in the case of people that aren't running money their "book" is called hype and they want as much as possible. Instead of watching the TV, and that includes CNBC, or reading Newsweek to help guide your investment decisions try doing your own research. If you want to save time, or just supplement your research then consider services such as The Macro Trader (I just talked my book) or others who market their goods not by ridiculous hype but by sharing their research backed by something other then an ill-informed sound bytes. No one will ever be perfect but we can all at least live in reality and not in lala land where the USD is toilet paper, all bonds have defaulted, and Armageddon reigns on earth.
If you are one of these people who only listen to pundits, politicians, and other putzes and you believe this then please stop reading, scroll down to the bottom of the page, find my e-mail, and let me know how many squares of toilet paper you need. I am running a special of two triple ply Charmin squares for each dollar you send me. Seriously I will trade toilet paper for US Dollars all day long. Why you may ask? Well if you look at the evidence you will see that while the monetary base has exploded to almost triple the size of three years ago and yet the US Dollar is essentially in the same place that is was three years ago. Look at the chart below and you will see that while some rises in the monetary base led to a fall in the USD others led to a rise in the USD. Over the past three years it has obviously let to nothing at all in the USD as the price is virtually unchanged. With the runaway inflation, runaway deficit, and collossal rise in the monetary base the USD by conventional wisdom should be trading at 0, instead it is holding up quite well. (Click on chart to enlarge)
US Dollar Spot Index and US Monetary Base
Please don't listen blindly to so called experts on TV. Everyone is always talking their book and in the case of people that aren't running money their "book" is called hype and they want as much as possible. Instead of watching the TV, and that includes CNBC, or reading Newsweek to help guide your investment decisions try doing your own research. If you want to save time, or just supplement your research then consider services such as The Macro Trader (I just talked my book) or others who market their goods not by ridiculous hype but by sharing their research backed by something other then an ill-informed sound bytes. No one will ever be perfect but we can all at least live in reality and not in lala land where the USD is toilet paper, all bonds have defaulted, and Armageddon reigns on earth.